tv Nightly Business Report PBS June 6, 2014 6:30pm-7:01pm PDT
this is "nightly business report" with tyler mathisen and susie gharib. >> back to even, the economy finally regains all the jobs lost during the recession helping stocks extend their record rise. stars and shareholders, walmart's annual meeting was part pep rally and strategy session, but the focus was on stemming slow sales. our guests tonight will talk about double digit returns over the next year. all that and more tonight on "nightly business report" for friday, june 6th. good evening, everyone, and welcome, susie gharib is off tonight. well, the dow, the dow transports and the s&p 500
closed at record highs today, with good reason, 217,000 jobs were added to the economy last month, about what the experts were looking for. the nation's unemployment rate held steady at 6.3%. over the past month, job growth has averaged a solid 32,000 new jobs a month. on wall street, investors reacted by buying up stocks sending the major averages higher. the dow up 8 points, a record close there, nasdaq up 25, and the s&p, a new record high, up nine. hampton pearson has more on today's may jobs report and a closer look at where all the new jobs are coming from. >> reporter: there was a post-recession milestone in the otherwise steady as she goes may jobs report. since february 2010, payroll employment has increased by 8.8 million jobs, that is 100,000 more than the economy lost in just two years at the beginning of the recession.
but leading economists say there is still a long way to go. >> we are back in neutral arms but of course the population has grown in the meantime, but the share of the population has dropped is still far below where it was in 2007. >> reporter: from the obama white house, a more optimistic response. >> we now have 51 straight months of job growth, 9.4 million jobs added by our private sector. we saw wages rise this past month. there is definitely a lot more we need to do but this is the type of progress we would like to see in the economy. >> private job sector growth was a surprise, employers adding more than 217,000 workers with more than half the gain coming from health care and worker sect sectors, other growth, food services, transportation and warehousing, adding nearly 50,000 workers to payroll in may. blue apron, a start-up, that
ships packaged meals to home chefs across the country is a perfect example. >> our concept is we want to help you learn in the kitchen. we want healthy, seasonal fresh produce, whole grains and the kind of food you would want to cook on your own but you just wouldn't normally do or know how and we help make it accessible to people. >> in less than two years it doubled its work force including going west to san francisco. this brand-new facility in the bay area is in the process of hiring 400 workers for all types of jobs. >> we need more people who can help us manage the logistics of our work, helping us in the kitchen, put together our kits with great care and quality that our customers need and working in the shipping and receiving side of what we do also. >> reporter: there are lots of new jobs serving folks who still like to eat out. bars and restaurants added 30,000 new employees last month, 300,000 in the last year.
for "nightly business report," i'm hampton pearson in washington. the markets have largely already baked in this week's good economic news, he is the global chief investment strategist. welcome back, if it has done what you say in many of the segments and already baked in the good news what does it imply for what investors should do now? >> well, right now markets are benefitting from the environment. and you have growth accelerating and low inflation, rates are low. that is the good news, the problem is that is the parts of the equity market that already reflect that good news. we still think investors should stick with stocks, they are cheaper than bonds, really as a matter of picking your spots and finding those part of the equity markets that are still relatively cheap. and they have a little bit of concern or there is pessimism in
the price, and there is a downturn. >> and where do you find that happen? >> i think there are a couple of places that look to be cheap on a relative basis, again nothing is cheap on an absolute basis, but compared to the broader market in the u.s., large cap companies seem to be cheaper than the small cap company, energy, and agreeing on the price. then our large recommendation is for investors to cast a wider net. and if you have mostly been investing in the u.s. look at markets in japan and europe that are much cheaper than u.s. stocks. >> do you think europe can turn around based in part on what before draghi did this week? certainly you could put money there. >> certainly there are significant head winds, but again, going back to my comment about being priced in, europe is cheaper, growth is going to be
lower, we would like to see lower profitability from european companies, they are factored in from the price. another market, japan, 1.2 book value, japan has a long list of issues that people could point to but we would say that a lot of the issues reflect in the price. and japan is likely to get a tail wind from the central bank that will keep easing long after the feds are involved. >> how is the economy doing, russ? >> the economy is doing better, better with a little bit of a sarcasm because it is not great. there is improvement in the labor market, were we back to where we were before 2013? 100,000 jobs in the month, an improvement from the winter but not what you would expect for a robust recovery. and while we're improving there are still the large structural head winds that act on improving
the economy. wages are slow for a lot of middle income families and we still have a lot of people dropping out of the labor market. and over the long-term if they don't come back in that is another long drag on growth over the long term. >> russ, good to see you. and good news for uncle sam's credit rating, after being downgraded a few years ago, s&p now says it could lift the nation's credit rating from a double a-plus to a pristine triple rating, only if there is a lower national debt. u.s. consumers borrowed more in april with the credit card rates going faster than in years. it rose $27 billion that month, mostly due to car and student loans. along with footing nearly $9 billion more of purchases on plastic. well's it looks like bank of
america may pay a heavy debt. 12 billi$12 billion to settle p the justice department and a number of the bank's handling of the mortgage loans that went bad. large banks have agreed to pay almost $100 billion to settle cases related to the 2008 financial crisis. there is a rundown of some of them. more on the proposed settlement. $12 billion, amon, by anyone's stretch is a lot of money, where would the money go? would it go back to the victims of the problem or into a government fund? where? >> well, that is one of the many questions about all of this, tyler, the $12 billion figure and the speculation and report i ing, you have to follow the bouncing ball because the number could end up being significantly lower than 12 billion or higher, maybe not much significantly higher than $12 billion. but still a lot of negotiation's
going on behind the scenes here. what we don't know is where this thing is going to land and when the settlement is going to come out. once it does, though, your question is a good one, typically what they do in these cases is they find some of the money in the pool of finances that go back to some of the people that were hurt by the original mortgage processes. and then after that the rest of it just goes to the united states treasury as part of the settlement into the general fund. it is usually divided up into series, where this goes ises"wa part of the negotiation going on right now, tyler. >> bank of america has already paid tens of millions to settle claims arising from mortgage problems, are we likely to see other banks s s settling from t systemic housing problem? >> we are, they are looking back to get some of the money to the people hurt in the housing crisis and to demonstrate they're able to do something even though we're now years after the fact.
there is definitely a concerted effort here in washington going on. have a good weekend. on this job's friday, the nation's biggest employer walmart held their annual meeting. but despite the star power and the festive atmosphere, walmart has a lot of work to do following the declines in the united states. investors sent shares a fraction lower today. share eisen was in fayetteville, arkansas. >> reporter: harry connick, jr., pharrell, an annual shareholder meeting wherep> investors come hear executives speak, vote on proposals and of course enjoy the all-star performances. it is a çfestive performance, doubt about it. but if you're a walmart shareholder it has been
disappointing. in fact, in the past few years you would have missed out on walmart's rally. that is why they are looking at strategies. >> we need to be at the forefront of technology. we'll lead with urgency to get ahead of change. >> reporter: mcmillan, ceo, talked about printing and 3-d work, getting into the hot tech trends, on the retail front they're focusing on neighborhoods. smaller stores carry pharmaceuticals and groceries. walmart is set to open hundreds of them this year. walmart is also testing convenience stores like 7-eleven which plan to offer everyday low prices all in an effort to adapt to changing consumer habits and slower sales. but today, shareholders were in celebration mode. >> the different statistics and new programs that are coming out, things we're looking forward to. >> the atmosphere here, everybody is cheerful. it is just amazing.
>> we love our walmart. >> for "nightly business report," sarah eisen, fayetteville, arkansas. and still ahead, stocks improving and looking at companies you surely know. they will tell us which ones and why. more recalls at general motors, the automaker announcing four more today for another 90,000 vehicles for air bag related issues in late model chevy silver ados, camaros and other makes, these latest
recalls make a total of nearly 4 million gm cars and trucks called in this year. if you don't own a car you may be familiar with uber, the app-based car service that competes with traditional taxi cabs and black cars in cities. uber says they just secured $2.1 billion in funding giving the company a market funding, this is a taxi service basically, a market value of more than $18 billion. and concerns about accounting issues pressured shares of hertz, the company is reviewing its records for 2012 and 13 for regulatory filing. hertz expected first quarter results to be below estimates because of costs related to that review. ups named a company veteran as its next ceo. the package delivery giant's
chief operating officer will take the top job september first, the company's current ceo, scott davis, will become the company chairman. he spoke today about the company's future. >> the biggest issue is we're going to continue to grow our international business. the merging markets are growing quickly. we have responded and we're going to continue to respond accordingly. >> shares were off just a fraction at 103.59. nuts to you or maybe not. shares of diamond foods fell today after the company posted disappointing results. earnings came in well below expectations which the food company blamed on weakness in its nut business. diamond did say it is pleased with its snack unit which included pop secret pop corn. still, shares were down almost 11% to 29.74. that is a lot of almonds. and eddie lampert, and the
shares with sears, how to turn around the struggling business. the stock was up almost 2% to $40.80. after the close, billionaire carl icahn disclosed a stake in family dollar, he believes shares are under-valued and plans to discuss strategies with the company's board which may include strategic alternatives. shares spiked after the closing, shares up 60.53. our market monitor tonight is expecting a 10% correction in /j it as healthy. investors should buy stocks when and if it happens. he is chief equity strategist, phil, welcome to have you. what could trigger a correction? >> well, tyler you have treasury ills and stock prices that are both over-priced here. the vics, you talked about that before here sitting down here at a cycle low.
so you're certainly poised for 4zmátq' certainly we could see modest summer hiccup. again if that happened we would use it as buying opportunity. >> there were reports earlier this week that fed was concerned about complacency in the market, there is notñr a lot of hedging are you concerned that investors are complacent? >> there are a lot of fundamental concerns in the marketplace to the second half on whether or not it is going to bounce as good as the second quarter. you have a lot of geo-political risks in the middle east, and the fed, the transition and the monetary policy in the wake of going from ben bernanke to yellen. so there are certainly a number of things that could pop up over the summer. >> well, let's go to your buy list, led by alaska air, why do
you like it? >> well, the airline companies have found religion. they have rationalized pricing and capacity. this company is very well managed. it has a different root structure. stocks have done well but we believe we could do another 10 or 15% in the next year or so. >> and boeing which is obviously related to the airlines but in a different way. do you like it? >> well, you have about a four-year back log on that new 787 plane which is extraordinarily fuel efficient. so as the airlines continue to make money and look to upgrade their fleet with better technology, better fuel efficiency, this plane is getting a disproportionate amount of interest. >> we started with an a, went to a b, now to an h. home depot and the consumer. >> the consumer is back, it was the worst christmas since 2009, but easter was pretty good, the
weather is rebounding so you will get good market and lawn sales, we do not believe the housing market is dead. depot has been going side ways and we believe the stocks will go higher as the transition materializes. >> the fed is probably going to end its buying of bonds sometime later this year. interest rates might start to move up. is that a threat to the market? >> not at all. because the normalization of the fed funds rate which we believe will start the middle of next year, the end of the taper which we believe will happen by the end of this year the market should embrace that as a positive. the fed would not embrace the monetary policy unless they were confident that the economy could operate without this extraordinary support of monetary policy. >> i would think they were going to wait and see on interest rates and be very data-driven about that. there is no obligation they have to raise interest rates, is
there? >> and that is exactly the right term. data dependent. it will probably be a year before they take this step and if the data over the next course of the year does not support it, by that i mean we're looking at better trend line gdp growth, you know that 3.5% level. we want to see job creation continue at this 200,000 pace over the next year, consumer strong, manufacturing strong. if those components are now there we don't expect the fed will commence the tightening of monetary policy. >> phil, any disclosures on alaska home or home depot? >> we own all of those stocks in the allocation fund. >> today is d-day. and president obama and russia's vladimir putin were among the world leaders in normandy today,
commemorating the day. more than 10,000 u.s. soldiers are buried there. we'll be right back. finally on this jobs friday, if a summer blockbuster is on your entertainment menu it could include a super hero or two, and super heroes are the thought behind our latest bright idea. one enterprising michigan woman became a mother of invention when her boy's birthday party presented her with a necessary. she needed a super hero and needed a cape. so she caped, she saw and
conquered. mom, super hero, business woman, sort of. >> i didn't know anything about business. i had a hunch. >> reporter: back in 2006, her son, owen, about to turn four, requested a super hero birthday party. holly made capes and the party was just supper. >> they started to run around our back yard, we didn't have to do any entertaining. >> reporter: one of the moms at the party noticed. >> she said you need to make these. and i said well, we'll see. >> reporter: she decided to give it a try a few weeks later and bought 100 bucks worth of material. spent a few hours sewing capes and got some help putting up a website. >> i would make a few, sell them, use the money to buy more fabric and it kept snowballing. >> reporter: by 2009, she was taking in three times what she made as a school teacher but her
life was consumed by work. >> she explained that she was making super hero capes and i'm scratching my head thinking there is no way anybody is going to make any money doing this. >> reporter: so he did a little research. >> they're cool, and there are 20-something million kids in the u.s. so i came to holly and said you know i think i can sell these for you. >> he would bring me stacks of orders. i was so overwhelmed. and you know, he teases me. that every time i walked into your office you looked like you were going to cry. >> reporter: the tears are long gone now. with his help, holly bartman's hobby became a business. superfly kids, outside detroit, 17 employees make capes, arm markers and tutus. wholesale orders helped to take them to another level.
2013 revenues. $2.3 million. >> people have asked me why don't you have this made overseas. and my attitude has been there are plenty of people to do it here. you know, as far as being able to customize that is not something you can do overseas. and that is what we're about. >> up, up and away! >> reporter: super heroes, though, are about giving back. in april, superfly kids put on detroit's first superfly run. capes were encouraged but not required. they raised thousands for charities. >> we can all provide for the greater good. and the super hero theme is a pretty unanimous, non-confrontational all inclusive way to do that. >> reporter: even when cash was tight, holly donated to schools and charities, even bringing dreams to life.
after all, aren't moms all super heroes? >> i think so we just all hide our capes. >> reporter: and maybe, just maybe, turns out being a good mom can be good business, too. >> they need to do that. that is part of childhood. so we're helping them do it. >> and there is my cape. holly sent us a cape, this one doesn't look half bad, does it folks? with great business news comes great responsibility. well, it is not just the business growing out there in michigan. they hope to take the super run now into 30 cities coast to coast, the next one happens to be tomorrow morning in frankenmuth michigan at 8:30. they sent us one, but my business producer said don't wear it. we'll see you monday, i'm tyler mathisen.
>> what was she so nervous about, then? >> oh, god knows, troy. it's this bloody village. remember last time? nobody will ever tell you the truth. >> dci tom barnaby detected his way onto our television screens in march, 1997. >> find out what calls miss simpson made after 6:00. >> so you're taking it seriously then, sir? >> no, troy, actually, i'm just filling in time until tea. >> right.